Fund Probe Worries Hyundai Affiliates

The prosecution is calling Chung Mong-koo, chairman of the Hyundai Kia Automotive Group, in today for an investigation into his suspected involvement in a slush fund scandal. Hyundai’s business partners are expressing worry over its possible negative impact on their businesses.

The affiliated companies have already sent in a written petition to the prosecution and Hyundai car dealers in other countries to keep watching on the direction of the prosecution’s investigation.

According to business sectors and the prosecution, the Association of Hyundai Kia Automotive Group’s Affiliates sent in a petition to the prosecution last Saturday calling for light punishment on Hyundai. As many as 50,000 workers’ signatures from about 1,800 affiliates were included in the petition.

In the petition, Lee Yeong-seop, the president of the association pointed out, “It is very regretful that Hyundai is facing unnecessary challenges such as damaging credibility in overseas markets and causing glitches in group management,” adding, “The pressure is seriously getting to affiliated companies now because our business hinges on the group’s performance.”

The affiliates also indirectly called for light punishment for Chairman Chung, and his son, Chung Eui-sun, president of Kia Motors, by arguing that, “if the investigation results in the arrest of these two leaders, the group’s global marketing initiatives will be driven to paralysis. This will end up with snowballing losses for its affiliated companies.”

But on the homepage of the Supreme Public Prosecutor’s Office, people are leaving comments, saying, “They are now being questioned by the prosecution because they enjoyed illegal benefits by using the nation’s taxes. But without begging the people’s pardon, they are attempting to dodge the responsibility by using workers of affiliates. It is an outrageous tactic.”

Hyundai car dealers in overseas markets are also worried over the effects of the investigation.

Scott Pink, president of the Hyundai Car Dealers’ Association in the United States, said at a meeting of representative dealers in North American regions held at Los Angeles last week, “I don’t want to imagine that customers in the U.S. will avoid Hyundai cars because of factors not related to business,” adding, “I am anxious that car sales might drop due to this incident.”

In regard to the prosecution’s investigation, it is reported that Scott will send a letter to the headquarters of Hyundai Kia Automotive Group to express worry. Meanwhile, the O’Brien Automotive Team, a major car dealer in California, sent a letter warning, “This incident may cause serious damage to the brand value of Hyundai cars you have achieved in the overseas market.”

Sung-Won Joo Hyo-Lim Son swon@donga.com aryssong@donga.com